Williams (as liquidator of Scholz Motor Group P/L (in liq)) v Scholz & Anor

[2008] QCA 94

Queensland Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Management and administration
3. › Duties and liabilities of officers
4. › Insolvent trading
5. › Duty to prevent insolvent trading
6. › Reasonable grounds to suspect insolvency
7. › Whether directors aware of grounds for suspecting insolvency
8. › Corporations Act 2001 (Cth), ss 588G, 588M
1. Corporations
2. › Management and administration
3. › Duties and liabilities of officers
4. › Insolvent trading
5. › Defences
6. › Whether directors had reasonable grounds to expect solvency
7. › Whether relief under s 1318 available
8. › Corporations Act 2001 (Cth), ss 588H, 1318
1. Corporations
2. › Winding up
3. › Insolvency
4. › What constitutes insolvency
5. › Whether capacity of directors to provide personal financial support relevant to company's solvency
6. › Whether willingness and ability to provide support must be established
7. › Corporations Act 2001 (Cth), s 95A
1. Appeal
2. › General principles
3. › Admission of fresh evidence
4. › Whether special grounds established
5. › Whether evidence could have been available at trial with reasonable diligence
6. › Uniform Civil Procedure Rules 1999 (Qld), r 766(1)(c)

Quick Take

When assessing company solvency under s 95A of the Corporations Act, the personal financial capacity of directors to provide loans or share capital is relevant only where there is evidence that the directors were both willing and able to provide such support. The mere theoretical possibility that directors could borrow and on-lend funds, or the fact that directors met obligations under personal guarantees, does not establish the company's solvency. The function of s 1318 is not to subvert the operation of ss 588G and 588M, and relief will not be granted where directors knew of deteriorating finances yet allowed the company to continue incurring debts.